Drought and fertilizer shortages could cut Indonesia’s palm oil production by 3 mln tons

Indonesia’s palm oil production could decline by 3 mln tons in 2027 due to worsening drought conditions associated with El Niño and deteriorating plantation conditions. According to the Indonesian Palm Oil Association (GAPKI), the main risks include insufficient rainfall, plantation fires and financial difficulties faced by smallholder farmers, who are being forced to reduce fertilizer application. Inadequate nutrient supply weakens oil palm trees and makes them more vulnerable to prolonged dry periods, potentially affecting yields.

GAPKI Chairman Eddy Martono warned that El Niño could not only reduce moisture availability on plantations but also increase the risk of widespread fires. In several Indonesian regions, fires have already damaged oil palm plantations, destroying part of their production capacity. Restoring these plantations requires substantial investment and time, while the effects of the damage could reduce production over several subsequent harvesting seasons.

Despite growing climate risks, Indonesia’s palm oil industry has maintained positive production growth in 2026. In January–September, palm oil production reached 47 mln tons, up 8.4% compared with the same period last year. Exports of major oil palm products, including crude palm oil, palm kernel oil and oleochemicals, exceeded 27.3 mln tons, an increase of 9.6% year-on-year. Export revenue totaled $32.3 bln, while domestic consumption reached 18.8 mln tons, partly supported by the expansion of biodiesel production.

To reduce dependence on weather conditions, Indonesia is stepping up efforts to develop high-yielding, drought-resistant oil palm varieties. In 2026, GAPKI began introducing additional pollinating insect species, Elaeidobius subvittatus and Elaeidobius plagiatus, to improve pollination efficiency on oil palm plantations. In addition, the association distributed 29,281 wild oil palm seeds collected in Tanzania in May. This genetic material is intended for breeding new varieties that can better withstand prolonged periods of moisture stress.

Another major challenge for the world’s largest palm oil producer is its aging plantation base and the relatively low productivity of independent smallholders. GAPKI emphasizes the need for large-scale replanting and improved production efficiency. Without investment in replacing aging trees, high-quality planting materials and adequate fertilizer application, further production growth could slow, particularly as climate risks intensify.

Tags: Indonesia, palm oil